Fundamental Comment

Global shares rout push European equities to six-month low

Global shares rout push European equities to six month low

European shares dropped on Thursday, following overnight losses on Wall Street and sell off in most Asian indices, amidst fears surrounding the global economy from the U.S.-Sino trade war.

The benchmark Euro STOXX 600 index fell nearly 1 percent to 362.76, extending its drop for a second straight session and falling to its lowest level in six months.

Worries sparked on Thursday after China vowed countermeasures to the next round of tariffs threatened by President Trump, stressing they violate deals already reached between the U.S. and Chinese Presidents.

Fears that Europe’s biggest economy may heading into recession pushed the German DAX 30 index 1.2 percent lower to 11,355.47.  

Today, the yield on 30-year German bonds has fallen below -0.2% (-0.212%) for the first time ever.

France CAC 40 fell 0.9 percent to 5,205.44, Spain IBEX 35 slipped 0.77 percent to 8,460.40. In the U.K., FTSE 100 sagged 0.88 percent after it hit its lowest level since February earlier in the session.

In Asia, Japan's Nikkei hit a nine-day low on Thursday as fears of a global recession cooled Wall Street and pushed the yen, a safe haven, to a rally, negatively affecting the country's export companies.

The Nikkei 225 index fell 1.21 percent to 20,405.65 points, while the broader Topix index fell 2.09 percent to 1,468.11.while China’s CSI300 index rose 0.31 percent to 3,694.0 at the end of the session. Australia's ASX 200 index finished 2.85% down at 6,408.10 on Thursday, wiping around A$60 billion off the value of shares.

Wall Street fell sharply on Wednesday as fears of a recession dominated the market after the U.S. Treasury yield curve inverted for the first time in 12 years, which is usually an early indicator of recession.  

The yield on 30-year US treasuries has dropped below 2% (1.981%) for the first time ever, providing another sign that Fed interest rates may remain lower for longer.

The U.S. dollar index slipped for the first time in three sessions to 97.72 after hitting a high of 98.21, which is the highest since August 2.

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